Historically high valuations in major stock and bond markets, and meaningful recent losses across global equities have increased investors’ concerns about downside risk.
This issue of Alternative Thinking shows how different investments performed amid the worst quarters for stock and bond markets in recent decades. It concludes that certain long/short strategies have been not only market-neutral in the long run, but also during these tail events — suggesting a valuable role over the long-term, and when it really counts. It also documents strong complementary behavior from two strange bedfellows — private equity and trend following — which have each tended to do well when the other has fared poorly.
The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of AQR Capital Management, LLC, its affiliates or its employees. This information is not intended to, and does not relate specifically to any investment strategy or product that AQR offers. It is being provided merely to provide a framework to assist in the implementation of an investor’s own analysis and an investor’s own view on the topic discussed herein. Past performance is not a guarantee of future results.